News

Check out market updates

What $16M From Uber, Lyft Could Do for Chicago Public Transit

Chicago Mayor Rahm Emanuel (AP Photo/Charles Rex Arbogast)

Many cities are grappling with public transit revenue lost to private ride-sharing companies, and Chicago Mayor Rahm Emanuel wants to do something about it. On Tuesday, Emanuel announced a plan to raise taxes on Uber and Lyft rides over the next two years to fund CTA improvements.

Under the mayor’s plan, part of his 2018 budget, the 52 cent fee currently charged to Uber and Lyft riders will increase to 67 cents next year and 72 cents in 2019, the Chicago Sun-Times reports. If City Council approves the increases, the CTA will receive roughly $16 million in 2018 and $21 million in 2019.

Emanuel did not detail which CTA projects the taxes will fund, according to DNAInfo, but he pitched transit improvements as a potential draw for Amazon, which announced in September that it is looking for a city in which to locate its second headquarters. North American mayors are courting the e-commerce giant aggressively, with promises of tax breaks and any number of wild gimmicks. Emanuel, who recently submitted a formal bid to Amazon, is apparently returning to a (widely criticized) competitive strategy he’s employed before, touting Chicago’s transit system over those in New York and D.C.

“People take our mass transit system,” he said Tuesday, according to the Sun-Times, adding that that’s something “they’re not capable of doing right now in New York, D.C. and other areas because their mass transit system is broken.”

In 2016, the city’s current 52-cent fee generated $59.6 million, with 81 percent of the funds coming from Uber and Lyft, according to a city spokesperson. In 2017, the city expects to bring in $85.2 million — 88 percent of it from Uber and Lyft. But the city says as more people use the ride-hailing services, the city sees less in parking garage fees, CTA fares and rental car taxes.

While ride-hailing operators are increasingly touting themselves as partners with public entities — rather than competitors — there is evidence that their services detract from public systems. As Josh Cohen wrote for Next City earlier this month, new research from D.C.’s Office of Revenue Analysis recently highlighted the trend with data from Boston, Chicago, Los Angeles, New York, the Bay Area, Seattle and D.C., concluding that ride-hailing passengers decreased their use of public transit by around 6 percent. What’s more, they found that 49 to 61 percent of ride-hail trips would have not been made — or would have been made on transit, bike or foot.

According to the Sun-Times, Uber pushed back against the fee increases, but ultimately agreed to them, stating that the “future of urban transportation will be a mix of public transit and ride-sharing.” A Lyft spokesperson had some more conciliatory words for the mayor on the subject of the recent increases as well.

“We appreciate the mayor working to build a sustainable future for ride-sharing drivers and passengers in Chicago and look forward to continue collaborating on providing safe, convenient and affordable transportation options for the city,” Lyft spokesperson Campbell Matthews told DNAInfo.